Abstract
Netflix pioneered the online video rental industry and developed a successful business model that effectively managed customer acquisition, retention, and lifetime value. Blockbuster Video intends to slow Netflix's growth by launching an online rental program that appears to be seamlessly integrated with its huge network of offline video stores. Will Blockbuster's multichannel program hurt Netflix's customer acquisition and rentention rates? Simultaneously, competition from video retailers such as Wal-Mart challenges the core business model that Netflix built to maximize customer lifetime value.
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